Other than reducing the font size, is there any way to change the width of the Quest Watch list? I'm playing on a laptop with pretty limited space on screen.

Simply put, no. About the only thing you can do for a Quest Watch window that does not use the fixed size option, is to minimize it when you don't need it. You can set a key binding to minimize the QW in the default Blizzard key binding interface, or you can manually click on the minimize button on the QW header next to the lock symbol (it looks like a down-pointing arrow in a box).

I would recommend going to the Quest Watch page of Carbonites options, and checking the "Use fixed size list" option. That way you can make the quest list as large (or as small) as you want it. Let Carbonite reload the UI, then move the QW to somewhere out of the way on your screen. Size it how you want it, and then set a key binding to minimize it. Before you lock it in place (something I highly recommend for any of the on-screen Carbonite windows) make sure to minimize it once so you can reposition the minimized QW header to the same location as it is when maximized. For some odd reason, Carbonite saves the positions independent of each other, and the first time you minimize it, it will jump back to the location it was in when you checked the option.

You can do what Jeffy said and check the "Use fixed size list" option, which crops the entire list to a sizable window. You could also check "Put objective counts before objective names" option, so the numbers are visible even if the line is cropped off. Just tested that and it looks fine.